12 Top Tips to Cut Car Insurance Costs For Young Drivers

Did you know the average driver faces an annual insurance premium of £633, with drivers under the age of 25 paying over £1,400? Here are our 12 top car insurance cost-cutting tips for young drivers that can save you £100s.

1. Don’t assume third party is the cheapest

There are three different types of car insurance: third party only, third party fire and theft, and fully comprehensive.

Logically, third party insurance should be cheapest for young drivers as it offers a lesser level of cover than fully comp, yet this isn’t always the case.

The rationale is that insurers think people who choose third-party insurance are more of a risk. In one low-risk young driver quote, we found an annual £1,500 saving for having comprehensive cover over a third-party only policy.

2. Try adding a second responsible driver

Adding a second driver should push the cost up, yet bizarrely it can cut your costs. We tried adding a 40-year-old family member as an ‘occasional’ user (not a main driver) to an 18-year-old’s policy which cut the premium by around £1,000. These five tips show how it can cut your costs…

Car insurance is all about risk. That’s why it can work, if you’re a high-risk driver and you add someone who is a much lower risk as a 2nd (and/or 3rd) driver, they can bring down the average risk and you may get a cheaper policy.

This isn’t just for young drivers. While it works well for young drivers as they are automatically seen as a high risk and know many people, like their parents, who may be lower risk it can work for anyone – but of course is especially powerful for those with costlier insurance.

The better the driving history and lower their risk, the more impact it should have. Those with a good driving record are likely to help make the most savings, but anyone who’s a lower risk can help. By law insurers can’t des criminate over gender, but age, driving experience and history can make a difference.

This is about trial and error not logic. Your mum may increase the cost, your brother may cut it, or vice-versa. It’s just a question of trying different quotes and seeing what happens.

Different insurers respond in different ways: One may cut your costs adding your uncle, another may increase it. Therefore a quick way to check is by varying quotes on comparison sites – it’s easy to do, see our top comparison sites list below.

The second driver should be someone who would reasonably drive your car. So don’t add Lewis Hamilton, unless you happen to be his brother (and even then racing drivers are likely a very high risk so I wouldn’t bother) – but your mum, son, best mate or gran should be ok – as long as they would drive the car.

Never add someone as main driver if they’re not. This is known in the industry as ‘fronting’ and is fraud. If you do it and are caught you can face a criminal conviction and your insurance will likely be invalid.

3. Ensure you always minimise your risk

Whether or not you’re a young driver, insurance premiums (the payments made to insurance companies) depend on three things:

Chosen insurer, level of cover and your risk level.

Car insurance rates are set by actuaries, whose job is to calculate risk. You can make big savings by showing an insurer you’re not the typical high-risk young driver.

Each insurer’s price depends on two things: the underwriters’ assessment of your particular situation, and the pricing model that dictates the type of customers the insurer wants to attract.

4. Tell your insurer about special circumstances

If you haven’t got ‘normal’ circumstances, eg, you’ve made a claim in the past few years, have a modified car or expect to drive 100,000s of miles a year, tell your insurer. If you don’t and then try to claim, even for an unrelated issue, your policy may be invalid.

You also need to tell your insurer about any changes as this reduces potential problems in the event of a claim, even if it’s just your address. Trying to get insurance after you’ve had a policy cancelled is very difficult, very expensive and will follow you for the rest of your life.

A change in circumstances includes moving jobs, as insurers believe this can affect your risk. Scandalously, the unemployed often (though not always) pay higher rates for their car insurance – so tell your provider if you’re out of work.

5. DON’T pimp your car

Sexy it might be, MoneySaving it ain’t. The more changes you make to your car, barring security ones, the more you’ll be charged.

Always make sure you inform your insurer of any modifications to your car, whether you made them or not, or it may invalidate your policy.

6. Set the right excess without breaking the bank

It’s worth thinking about going for a policy with a higher excess – the amount of any claim you need to pay yourself. A higher excess will result in lower premiums but make sure you can afford the premium in the event you need to claim.

Many people find that claiming for less than £500 of damage both increases the future cost of insurance and can invalidate no-claims bonuses, meaning it’s not always worth making a claim.

So why pay extra for a lower excess? A few insurers will substantially reduce premiums for a £1,000 excess, so try this when getting quotes. The downside of this is if you have a bigger claim you’ll have to shell out more, so take this into account.

7. Never lie to the insurer

With insurance, remember – the golden rule is:

Tell them the truth, the whole truth and nothing but the truth.

If you’ve read these tips and thought, “it’s easy to lie about this”, then of course, you’re right. Yet lying on your insurance form is fraud. It can lead to your insurance being invalidated and, in the worst case, a criminal prosecution for driving without insurance.

8. Tweak your job description

Another quick win is tweaking your job description (legitimately of course). An illustrator is often cheaper than an artist, an editor than a journalist, a PA than a secretary.

Have a play with our Car Insurance Job Picker tool and see if small changes to your job description could save you cash. Remember, never lie as this will be considered fraudulent.

9. Never auto-renew

Nothing better illustrates car insurers preying on loyal customers than Sarah Cooper’s tweet. “My car insurance renewal is £1,200. New policy with same company is £690. How do they justify this?” They don’t. They just do it.

Insurers charge increasing amounts each year, knowing inertia will stop policyholders switching. If your renewal is coming up, jot it in your diary to remember it. Compare comparison sites and then call your insurer to see if they can match, or even beat, the best quote you found. If they can, you’re quids in.

10. If you live with parents try multi-car policies

If you’ve two or more vehicles between friends or family members in your household (vans can be included in this but bikes usually aren’t), some providers offer discounts if you insure them together. Comparison sites don’t have the technology to do these searches, so you need to compare manually.

Use comparisons for each car separately. The discounts are usually around 10%, so often it’s likely just finding the cheapest standalone insurer will win anyway. So always do a comparison first (see Combine comparison sites below), then try the deals below to compare.

Get all cars on one policy. Admiral MultiCar* gives a discount of up to 25% for up to five cars. All cars will be covered on one policy, so the renewal dates will be aligned.

Separate policies with a discount. Other insurers allow cars to have separate policies but give a discount as long as the vehicles are in the same household.

Additional providers who also give a multi-vehicle discount are Aviva*, Churchill*, Direct Line* and Privilege. Discounts vary and depend on your circumstances but all the above are worth adding to your list to try.

11. Consider telematics

Telematics is a policy which prices your premiums depending on how you drive. A device – known as a black box – installed in your car monitors your actions behind the wheel so the better your driving, the less you pay for cover.

If you are confident that you can drive well you can earn £100s back on the your cover via a telematics policy. Be warned however, that driving badly could also see your premiums increase.

12. Grab long-lasting quotes to lock in today’s price

Average prices are predicted to keep on rising throughout 2016 – by the end of September, the AA found prices were already 16pc higher compared to 12 months before – yet some insurers such as Aviva*, Post Office* have quotes that are valid for 60 days, Morethan for 45 days. They let you get a quote two months before your renewal is due, and keep that price, beating any possible future premium increases.

That quote should still be valid even if you get another quote nearer the time and the price has gone up however the price is fixed subject to you not changing any of your details.

Insurers which allow you to lock in quotes early

The following are just some of the companies that will let you lock in a new quote at least 30 days before your existing insurer’s renewal date.

Once you’ve tried the comparison sites, it’s time to check specialist young driver policies to see if they undercut them. If you are a careful driver who doesn’t cover many miles and drives during off-peak hours, you could see a reduction in the premium.

Specialist providers to consider

Several providers offer telematic products. Here we’ve listed a selection of the best around.

Direct Line Drive Plus. Direct Line DrivePlus* can give a discount of up to 25% upfront which can be lost if you don’t drive appropriately.

Coverbox. A ‘pay and drive’ scheme from Coverbox* with no curfews or any limit on your mileage.

iKube. Alternatively, iKube is aimed at 17-25 year olds who don’t often drive between 11pm and 5am. There’s an extra fee for driving between these times, making the cost prohibitive if you do so.

Drive Like A Girl. Another policy aimed at 17-25 year-olds who avoid driving overnight (this time between 11pm and 4am) is Drive Like A Girl. It’s not just for girls, it’s open to boys too – but show you can “drive like a girl” and you could get money back. It’s also open to all ages.

Insure The Box. With Insure The Box, you can pick either a 6,000, 8,000 or 10,000 mile-per-year policy for your premium, and then you can earn extra miles by driving safely – or buy more online if you need to during the year.

Here, GPS or tracking devices monitor how you drive. Of course, even then, the price still depends on your personal risk profile.

Co-op. Motorists aged 17-25 who get Co-op’s* young driver insurance will have a box fitted to their cars to monitor their acceleration, speed, braking, cornering and what time they’re driving. You can pay upfront for the year or by direct debit.

But to gain a discount before buying, download the Co-op young driver app to your smartphone and drive 200 miles over at least 10 different days to get a driving ‘score’. You’ll then receive a link via email and any discount (up to 20%) will be automatically applied to your online quote.

The price of the insurance (and the amount of discount) can vary, depending on how well the car’s been driven. The better you drive the more discount you’re likely to get, and continued bad driving could see your insurance cancelled.

Specific young driver brokers

While comparison sites are very good for people with normal situations, for others they can under perform. Swinton’s Young Driver insurance is worth checking out, as it searches a panel of young driver and student car insurance providers.

Other brokers providing for young drivers include A Plan, Thames City, Only Young Drivers, Adrian Flux and Endsleigh (best to call for quotes, as not all offer these online).

Or try speaking one-on-one to a local insurance broker about your individual circumstances to see if they can find you a decent policy (search on the British Insurance Brokers’ Association website).

Learner driver insurance

If you’re a learner, it often means being added to parents’ or friends’ car insurance as an additional driver which can up the cost, and put no claims bonuses at risk.

With Marmalade’s New Driver* insurance you get the insurance policy alongside low-risk new or nearly new cars on a two to five-year hire purchase or personal contract plan.

This can bring the insurance cost down dramatically, but obviously, you’re buying a car at the same time. Do the numbers very carefully before signing up, though it can work out cheaper in the long run for some.

Marmalade’s New Driver* car policies also include telematics devices. The cost savings for good drivers are built into your starting price, so it can be increased if your driving is poor.

Pay how you drive (telematics)

Telematics is a type of motor insurance policy which prices your premiums depending on how you drive.

A device inside your car monitors your actions behind the wheel. So the better you’re driving, the less you pay.